Missouri Income Tax Reform

In 2019, Missouri residents will see their personal income tax rate decrease. A bill was signed by Gov. Mike Parsons that included tax cuts for the upcoming year. This legislation will decrease the rate from 5.9% to 5.4% beginning in January 2019.

Parsons said, “The main ingredients to this responsible plan are ensuring we keep taxes simple and fair while also ensuring we maintain our needs for key functions of government like infrastructure and education. With this new tax cut, Missourians will be able to bring their hard-earned cash home and put it to work in our state.”

The legislation includes further decreases if Missouri meets target revenue. The top rate would decrease to 5.1% if revenue targets are met in the upcoming year. It will further decrease by 0.1% each following year the targets are met.

Bringing the rate down to the 5.1 percent mark would put Missouri into the 15 states with the lowest tax rates. In 2023 the plan will be fully implemented. During that time analysts state that the new legislation will result in an estimated $5.8 million loss in government revenue.

In order to offset the tax cut, Missouri limits the federal income tax deductions paid. You can still deduct up to $5,000 as a single filer. As combined filers, you may still deduct up to $10,000. Missouri phases out the deduction at specified Missouri adjusted gross income levels beginning in 2019. The Missouri adjusted gross income levels and percentages deductable of federal income tax are the following:

  • $25,000 or less – 35%

  • $25,001 to $50,000 – 25%

  • $50,001 to $100,000 – 15%

  • $100,001 to $125,000 – 5%

  • $125,001 or more – 0%

Along with this legislation Missouri reduces the maximum business income deduction for individuals from 25% to 20%. For Personal Exemptions, Missouri will not allow exemptions when a taxpayer’s federal exemption amount is zero.

As a Missouri Tax Payer, it is important to know how tax rates affect you and your income. If you have any questions regarding your personal income taxes, corporate taxes, or audits please contact us at Schultz, Wood & Rapp, your Missouri tax accountant.